Calm Down! Banks Do Not Need to be Broken Up – Gorman
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Price: $92.58 -1.35%
Overall Analyst Rating:
NEUTRAL (
Down)
Dividend Yield: 1.7%
EPS Growth %: +18.8%
Overall Analyst Rating:
NEUTRAL (
Down)Dividend Yield: 1.7%
EPS Growth %: +18.8%
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Morgan Stanley (NYSE: MS) CEO, James Gorman, is tired of all the talk about breaking up large banks in America, and he thinks people should just calm down.
“This is a knee-jerk discussion that’s been going on…We need to just calm down, let this play out with the new regulation, the new capital rules, and at that point then figure out which businesses to accelerate and which businesses to slow down,” he said today during an interview with Eirk Schatzker on Bloomberg TV.
His comments were in response to increasing concern from the public and politicians that banks in the U.S. are too big to fail. Fears about too big to fail peaked in the U.S. following the collapse of Lehman Brothers and the bailout of AIG (NYSE: AIG), and they were reignited recently after JPMorgan (NYSE: JPM) announced a $2 billion trading loss in May of this year.
In Gorman’s view, efforts to break up large banks are misguided and reaction driven.
“10 years ago it was exactly the opposite,” noted Gorman, “How do we put these institutions together? All of the sudden it’s how do we separate and break up these institutions.”
In other bank related news, Barclays has agreed to pay more than $450 million to resolve accusations that it attempted to manipulate Libor rates, the first settlement in a global investigation involving many of the world’s biggest banks. Regulators in the United States have issued subpoenas to several banks -- including Bank of America, UBS and Citigroup -- about how Libor was set, and Canada is investigating the activities of JPMorgan, Deutsche Bank and several other major banks about their activities around Libor.
Suffice to say, Gorman’s comments may fall on deaf ears as banks around the world are generally viewed by citizens as “vampire squids wrapped around the face of humanity”, a description coined by a former employee of Goldman Sachs (NYSE: GS).
“This is a knee-jerk discussion that’s been going on…We need to just calm down, let this play out with the new regulation, the new capital rules, and at that point then figure out which businesses to accelerate and which businesses to slow down,” he said today during an interview with Eirk Schatzker on Bloomberg TV.
His comments were in response to increasing concern from the public and politicians that banks in the U.S. are too big to fail. Fears about too big to fail peaked in the U.S. following the collapse of Lehman Brothers and the bailout of AIG (NYSE: AIG), and they were reignited recently after JPMorgan (NYSE: JPM) announced a $2 billion trading loss in May of this year.
In Gorman’s view, efforts to break up large banks are misguided and reaction driven.
“10 years ago it was exactly the opposite,” noted Gorman, “How do we put these institutions together? All of the sudden it’s how do we separate and break up these institutions.”
In other bank related news, Barclays has agreed to pay more than $450 million to resolve accusations that it attempted to manipulate Libor rates, the first settlement in a global investigation involving many of the world’s biggest banks. Regulators in the United States have issued subpoenas to several banks -- including Bank of America, UBS and Citigroup -- about how Libor was set, and Canada is investigating the activities of JPMorgan, Deutsche Bank and several other major banks about their activities around Libor.
Suffice to say, Gorman’s comments may fall on deaf ears as banks around the world are generally viewed by citizens as “vampire squids wrapped around the face of humanity”, a description coined by a former employee of Goldman Sachs (NYSE: GS).
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